Sony (NYSE:SNE) announced that it has cumulatively sold 35.9m PlayStation4 consoles as of January 3, consistent with the consensus expectation of 90% y/y growth. Net-net this is a positive development for SNE and very supportive of its near-term outlook. An upcoming catalyst for SNE investors will be the December NDP data. Recall that November NDP data showed PS4 shipments were up +85% y/y and outsold Microsoft (NASDAQ:MSFT) Xbox by almost 20%. The strength in PS4 sales gives me comfort in SNE's ability to beat its full-year game sales guidance, but more importantly the better-than-expected hardware sales is also driving positive implications to other sectors such as cable and media. I note that Sony's PlayStation Vue web-TV is well positioned for the cord cutting trend in the U.S. and this is a positive to media owners that rely on SNE for content distribution (see - Sony: PlayStation4 Leading The Way and Sony: Replacing Your Cable Bundle). I remain bullish on SNE, as it is one of my best ideas in the Asia-Pacific region.
Ahead of the December NDP data, SNE is already seeing solid momentum in the US with strong console and game sales in November. SNE's latest announcement reinforces my bullish outlook on SNE and that PS4 could once again beat Xbox when the NDP comes out later this month. Globally, PS4 could be outselling Xbox by 80-100% judging by the historical NDP data. Overall, SNE sold 5.9m units from Thanksgiving to the first week of January, implying roughly 135k units per day, or 35% above the prior run rate of roughly 100k units per day. In addition, 35m physical and digital copies of PS4 games were sold during the holiday season.
Besides game and console sales, PS Plus subs was up +60% y/y at the end of 2015 to roughly 18m globally with momentum picking up on a monthly basis driven by hardware sales. I note that PS Plus will be important for SNE to grow its player base on a global basis and enhance its network effect so that its eventual rollout of PS VR product could be a success. Given that Facebook has already rolled out its own VR product, the attention will be now on SNE to see how the company will price its VR headset and the content offered.
Finally, PS4 sales are also driving the penetration of PlayStation Vue web-TV product that it is priced more attractively than the conventional cable bundle. Investors can expect PS Vue to achieve 500k subs by next year and over 1m subs in the next three years driven by the ongoing cord-cutting trend in the US.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.